You will be redirected back to your article in seconds

Disney Beats Earnings Expectations, but Can’t Match Stellar Q1 of Last Year

Robust performance by its parks and resorts helped Disney beat analysts’ earnings expectations for the first quarter of 2017, though the entertainment conglomerate could not compete with its own blockbuster film success of the year prior, as both revenue and earnings per share slid behind last year’s levels.

The Walt Disney Company recorded earnings per share of $1.55 for the quarter ending Dec. 31, down from the year prior figure of $1.63, but better than the $1.47 that had been projected by analysts. The conglomerate’s revenue for Q1 dipped 3%, from $15.24 billion to $14.78 billion. Net income fell off from $2.88 billion to $2.48 billion.

The entertainment conglomerate faced a challenge that has now become routine — matching or bettering its own past stellar performance. That task was particularly steep in the most recent quarter for Disney’s film division, which topped $7 billion in box office receipts for 2016 and began last year with “Star Wars: The Force Awakens,” the third-ranking moneymaker of all time.

Disney’s stock had been on a steady upward trajectory prior to the call — increasing more than 18% since Nov. 1 and consistently remaining above the $100-a-share threshold. That’s well above other S&P 500 stocks, which have increased 8.5% over the same time frame. Disney shares dipped by slightly less than 2% immediately after the earnings news, to slightly more than $107 per share.

“We’re very pleased with our financial performance in the first quarter,” said Disney CEO Bob Iger. “Our Parks and Resorts delivered excellent results and, coming off a record year, our Studio had three global hits, including our first billion-dollar film of fiscal 2017, ‘Rogue One: A Star Wars Story.'”

Disney’s performance in the first quarter a year ago soared, with revenue up 14% from the year before and earnings per share leaping 28%, in large part because of the breakout success of the eighth installment in the “Star Wars” series. That meant the film unit had trouble keeping up in the most recent quarter, despite the more than $1 billion hauled in by the next “Star Wars” installment — “Rogue One,” which took in $1 billion-plus.

On a conference call with analysts following the release of earnings, Iger rebutted a question suggesting the possibility that the studio’s theatrical “hot streak” could cool off anytime soon. “We have a lot of visibility in the early part of the next decade for the film slate,” he said. “We feel great about the projects chosen and the progress we’ve made on them.”

The studio entertainment segment saw revenue dip from $2.7 billion to $2.5 billion, with operating income also declining from more than $1 billion to $842 million for the quarter.

Questions persist about how ESPN will stem the flight of subscribers from traditional cable television packages, losses that were pegged last year at 2 million paying customers for the fiscal year ending last October. Overall, the sports network is down about 10 million subscribers from its 2010 plateau of 100 million.

On Tuesday, the company reported revenue in media networks off slightly, from $6.3 billion to $6.2 billion, with income off from $1.41 billion to $1.36 billion.

The company hopes to keep inside the Disney fold some of those fleeing for online destinations by starting its own streaming service for sports. It made a move in that direction last fall by acquiring a one-third stake in BAMTech, the streaming services started by Major League Baseball. The new ESPN channel on the service is expected to launch this year.

But on the conference call, Iger made clear he is seeking a balance between these new opportunities and maintaining a presence in linear channels that isn’t going away anytime soon. “A lot of value is still being reaped from traditional distribution relationships, but it’s our full intent to go out there with ESPN and other branded Disney properties,” he said.

Disney’s second biggest division is Parks and Resorts. Like the film studio, that unit also faced tough comparison with its own strong first quarter of 2016, when revenue increased 9% and operating income pushed up 22%. But the park division, which saw the opening last year of the Shanghai Disney Resort, managed a 6% increase in revenue, to more than $4.5 billion, with operating income jumping 13% to more than $1.1 billion.

Those gains came despite the closure of parks in Florida during the quarter because of Hurricane Matthew. The fourth recorded closure in Disney World’s history was expected to help drive down revenue by about $40 million for the quarter, but the unit more than made up for that expected loss elsewhere.

Popular on Variety

More Film

  • Mackenzie Davis Terminator Dark Fate

    ‘Terminator: Dark Fate’ Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Paramount Pictures claims the top spot in spending with “Terminator: Dark Fate.” Ads placed for the sci-fi action film had an estimated media value of $6.81 million through Sunday for 796 national ad airings [...]

  • Judy & Punch review

    Damon Herriman Stands Out as 'The Nightingale' and 'Lambs of God' Lead AACTA Nominations

    Dark thriller, “The Nightingale” and miniseries “Lambs of God” lead the pack at the Australian Academy of Cinema and Television Arts Awards. In nominations announced on Wednesday, they picked up 15 and 18 nods, respectively. Jennifer Kent’s “The Nightingale” was one of six films nominated in the best film category. With others including Mirrah Foulkes’ [...]

  • Cardi B

    Cardi B Joins Vin Diesel in 'Fast & Furious 9'

    Cardi B has joined the cast of Universal’s “Fast & Furious 9” in an undisclosed role. It’s the rapper’s first movie part since her role as the stripper Diamond in STX’s drama “Hustlers.” Vin Diesel disclosed the casting Tuesday in a post on his Instagram account with a video that showed him and Cardi B [...]

  • James Wan

    Film News Roundup: James Wan's Horror Thriller 'Malignant' Gets August Release

    In today’s film news roundup, James Wan’s “Malignant” gets a late-summer release, a Rita Hayworth documentary is shooting and Women in Animation have announced diversity awards winners. RELEASE DATE Warner Bros. has set an Aug. 14 release date for James Wan’s horror thriller “Malignant.” Wan will direct the movie, based on a story by Wan [...]

  • Michael Shannon Benedict Cumberbatch Tuppence Middleton

    How Martin Scorsese Saved 'Current War' From Harvey Weinstein

    Director Alfonso Gomez-Rejon finally gets to release his version of his long-in-the-making “The Current War.” The film, about the competition between Thomas Edison and George Westinghouse, was originally set to be distributed by the Weinstein Company after Harvey Weinstein recut it, much to Gomez-Rejon’s chagrin. To make matters worse, Weinstein premiered the movie at the [...]

More From Our Brands

Access exclusive content